SATISH SHARMA, NEW DELHI V. ACIT, CENTRAL CIRCLE- 30, NEW DELHI

ITA 3084/DEL/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7842 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2015-2016
• Appeal Filed On: 01-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Search and seizure; Tangible material; Capital Gains; Bogus
• Section: 132; 153A

Judgement Text

1 ITA No. 3084/Del/2018 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘B’ NEW DELHI BEFORE DR. B. R. R. KUMAR, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A. No. 3084/DEL/2018 (A.Y 2015-16) (THROUGH VIDEO CONFERENCING) Satish Sharma N-10, Jangpura Extension, New Delhi ABDPS4074M (APPELLANT) Vs ACIT Central Circle-30 New Delhi (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM This appeal is filed by the assessee against order dated 01/03/2018 passed by CIT(A)-30, New Delhi for assessment year 2015-16. 2. The grounds of appeal are as under:- 1. Whether the Ld. CIT (A) was justified by upholding the valid Assumption of jurisdiction by A.O, ACIT ,central Circle -30 which is based on valid exercise of notice u/s 127. 2. Whether the Ld. CIT (A) was justified by upholding the Ld. A.O. order dt.27.12.2016 which are totally based on a general observation based on information narrated towards LTCG but nothing to do or even a whisper or any tangible material towards the Appellant. Appellant by Sh. V. K. Tulsian, CA Respondent by Sh. Jawed Akhter, CIT DR Date of Hearing 13.10.2021 Date of Pronouncement 24.11.2021 2 ITA No. 3084/Del/2018 3. Whether the Ld. CIT (A) was justified in passing the order by dismissing the rightful claim of LTCG without appreciating the submissions evidences furnished before him in regard to the transfer of long term investment by way of equity shares resulting in long term capital gains 4. Whether the Ld. CIT (A) was justified in passing the unlawful order on surmises by dismissing the Appeal even without considering the Facts and contention in respect of Admittedly being accepted the investment as part of Assets in the past. 5. Whether the Ld. CIT (A) was justified to uphold the Ld. AO order which was based on the arbitrary and on surmises, by denying claimed LTCG on mechanical and irrelevant factors and moreover no adverse material on record to disapprove the evidence on record 6. Whether the Ld. CIT (A) was justified to uphold the Ld. AO order Additions by way of denial of LTCG of Rs. 1,05,41,853/-, under the garb of section 68,without establishing the full prove case or pointing out the entire chains of the transactions to justify bogus transactions. 7. Whether the Ld. CIT (A) was justified to uphold the Ld. AO order who has wrongly arrive at a suo-motto conclusion based on various citations which have nothing to do in the present matter which are totally contrary to law and a such the order suffers from patient illegality .” 3. The assessee filed original return of income declaring income of Rs.79,91,390/- on 30/09/2015. A search and seizure action u/s 132 of the I.T. Act, 1961 was conducted on 09.10.2014 at various business and residential premises of M/s Kuber Group of cases including premise of assessee at N-10, Jangpura Extension, New Delhi and locker No. 37, Indian Bank, Jangpura Extension, New Delhi, of the assessee. During the course of search proceedings, cash of Rs. 51,00,000/- was found and seized from locker. 3 ITA No. 3084/Del/2018 The assessee has disclosed the same in his return of income for A.Y. 201.5-16. The Assessing Officer made addition of Rs. 1,05,41,853/- towards bogus long term capital gain through trading of shares of alleged penny stock (CCL International Ltd.). Thus, the income of the assessee was assessed at Rs. 1,85,33,243/-. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that the Assessment Order is totally based on a general observation towards long term capital gain but nothing to do with any tangible material which pointed out any discrepancies in the transactions. The Ld. AR further submitted that the assessee has rightly claimed long term capital gain as all the evidences was furnished before the Assessing Officer in regard to the long term investment by way of equity shares resulting in long term capital gains. The Revenue Authorities has admitted/accepted the investment as part of assets in the past but in the present year only on surmises and conjectures held that it is bogus, which is contrary to the actual records. The Ld. AR further submitted that scrip of M/s CCL International Ltd. was not black-listed scrips issued by the SEBI. The Ld. AR pointed out Page No. 25, 26, 13, 14, 15 as well as 22-23, 27-32, 39 and 40 of the paper book whereby the payment of the purchase of shares as well as the credit entry in respect of current account regarding the payment to the broker was also placed before us. These documents were also before the Assessing Officer. Thus, the Ld. AR submitted that the transaction is just and proper. There is no illegal transaction conducted by the assessee. The Ld. AR further relied upon the decision of Hon’ble Tribunal in case of Rakesh Narayan Gupta, Sh. Anchal Gupta, Udit Gupta Vs. ITO that of Lucknow Bench (ITA No. 501, 502, 504, 505/LKW/2019 order dated 16/2/2020 as well as the decision of the Hon’ble Delhi High Court in case of Smt. Krishna Devi ITA No. 125/2020 order dated 4 ITA No. 3084/Del/2018 15/1/2021. The Ld. AR also relied upon the decision of the Delhi Tribunal in case of Reeshu Goel vs. ITO (ITA No. 1691/Del/2019 order dated 07.10.2019) 6. The Ld. DR relied upon the assessment order and the order of the CIT(A). The Ld. DR submitted that the Assessing Officer has rightly made addition as descript mentioned is related to the bogus transaction in respect of unaccounted money of LTGC were the share of penny stock companies have been purchased and deliberately sold at a higher price, thereby manipulating the prices of the shares. The Ld. DR submitted that the decision of the Hon’ble Delhi High Court will not be applicable as the scrip mentioned in the said order is that of M/s Gold Line International Finvest Ltd. which is different from the assessee’s case. The Ld. DR also relied upon the decision of the Hon’ble Delhi High Court in case of Udit Kalra vs. ITO (ITA 220/2019 & CM No. 10774/2019 order dated 08.03.2019) 7. We have heard both the parties and perused the material available on record. It is pertinent to note that the assessee is a regular investor in capital market dealing in various scrips. The balance sheet showing the investments was before the Assessing Officer and the said investment was accepted by the Assessing Officer under Section 153A in the earlier assessment years. This fact was never disputed by the Revenue. 13500 shares of CCL International was purchased offline from M/s Fame Dealers Pvt. Ltd. on 27.07.2013 and the details of the same such as receipt of the shares and the value of the shares from M/s Fame Dealers Pvt. Ltd. were given by the assessee during the assessment proceedings. The assessee purchased 8500 shares online through broker and the payments made to brokers are reflected in the bank account. These details were also before the Assessing Officer. The assessee has DP account with M/s Ventures Capital Pvt. Ltd. and the proof of payment of Securities Transaction Tax duly paid as per the contract note was also submitted before the Assessing Officer. The assessee has transferred the shares through online platform of stock exchange that to through broker. The 5 ITA No. 3084/Del/2018 investigation wing report nowhere stated that the script of CCL International is blacklisted. The observation of the Assessing Officer that bogus LTCG is done by purchasing shares in preferential allotment i.e. private placement appears to be incorrect as the assessee has made purchases of 13500 shares from a private party through proper documents and the same is on record before the Assessing Officer as well. Besides this, the balance 8500 shares have been purchased through recognized stock exchange through broker. The Ld. DR or the Revenue has not brought on record any evidence that the broker was penalized by the SEBI or that the scrip of CCL International was black listed by the SEBI at any point of time. In fact the observations of the Assessing Officer are vague and general in nature. The assessee has given following details in respect of sale of these shares: * Transaction statement of demat A/c with I Ventures Capital (P) Ltd. * Detailed statement of account for the period 01.04.2013 to 31.03.2015 of Demat account with I Ventures Capital (P) Ltd. * Contract note dated. 31.10.2014 for sale of 2800 shares * Bill of broker (I Ventures Capital (P) Ltd.) dated. 05.11.2014 for sale of 2800 shares. * Contract note dated. 05.11.2014 for sale of 1000 shares * Bill of broker (I Ventures Capital (P) Ltd.) dated. 10.11.2014 of 1000 shares. * Contract note dated. 27.11.2014 for sale of 7800 shares. * Bill of broker (I Ventures Capital (P) Ltd.) dated. 01.12.2014 for sale of 7800 shares * Contract note dated. 12.12.2014 for sale of 5000 shares * Bill of broker (I Ventures Capital (P) Ltd.) dated. 16.12.2014 for sale of 5000 shares * Contract note dated. 15.12.2014 for sale of 1200 shares * Bill of broker (I Ventures Capital (P) Ltd.) dated. 17.12.2014 for sale of 1200 shares * Contract note dated. 18.12.2014 for sale of 1000 shares. 6 ITA No. 3084/Del/2018 * Bill of broker (I Ventures Capital (P) Ltd.) dated. 22.12.2014 for sale of 1000 shares * Contract note dtd. 19.12.2014 for sale of 3200 shares * Bill of broker (I Ventures Capital (P) Ltd.) dated. 23.12.2014 for sale of 3200 shares. * Bank statement showing receipt from broker against sale of shares. The Assessing Officer has referred some investigation carried out by Kolkata Investigation Wing, but the Assessing Officer has never given a detail in the assessment order whether the script of M/s CCL International was involved in the issue of manipulation of share market for providing accommodation entry of bogus LTCG. Merely stating that CCL International is a penny stock without giving any details of the report of investigation wing, Kolkata in the assessment order gives the scope for doubt as to on what basis the Assessing Officer has declared that the assessee was involved in the shares of the penny stock scam/scheme. In-fact, in assessment order, the Assessing Officer has merely assumed that the script of M/s CCL International Ltd. is a penny stock without any basis, but from the records it emerges that the said scrip is a valid scrip and the transaction entered into by the assessee does not involve any bogus purchase/sale of shares. In-fact, the Ld. AR relied upon the various decisions of the Tribunal wherein the said scrip i.e. M/s CCL International Ltd. was held to be genuine and the price variation involved in the particular period has nothing to do either with those assessee as well as the present assessee. The decision of the Hon’ble Delhi High Court in case of Udit Kalra (Supra) which is relied by the Ld. DR has given a scrip which was mentioned in the black list of the SEBI in respect of suspension of trading of the said scrip. But in the present case, the scrip is genuine (M/s CCL International Ltd.) and therefore, merely on conjunctures and surmises the Assessing Officer cannot held assessee responsible. Therefore, the Assessing Officer was not right in disallowing the claim of long term capital gain from sale of shares and the addition does not sustain. The CIT(A) also fails to take cognizance of the 7 ITA No. 3084/Del/2018 evidences produced before the Assessing Officer. Thus, the appeal of the assessee is allowed. 8. In the result, the appeal of the assessee is allowed. Order pronounced in the Open Court in presence of both the parties on this 24 th Day of November, 2021 Sd/- Sd/- (B. R. R. KUMAR) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 24/11/2021 R. Naheed * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 8 ITA No. 3084/Del/2018 Date of dictation 14.10.2021 Date on which the typed draft is placed before the dictating Member 14.10.2021 Date on which the typed draft is placed before the Other Member 24.11.2021 Date on which the approved draft comes to the Sr. PS/PS 24.11.2021 Date on which the fair order is placed before the Dictating Member for pronouncement 24.11.2021 Date on which the fair order comes back to the Sr. PS/PS 24.11.2021 Date on which the final order is uploaded on the website of ITAT 24.11.2021 Date on which the file goes to the Bench Clerk 24.11.2021 Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order